Downshifts in the economy have compelled San Marcos officials to consider revising budget assumptions for next year.
As discussions pertinent to the Fiscal Year 2009-10 budget begin, the San Marcos City Council directed the staff last week to work up a proposal that assumes no tax growth for the city’s revenues.
As a matter of budget policy, the city staff set to work on next year’s budget assuming three-percent growth in personnel costs and two-percent growth in all other costs. As personnel costs take up about 70 percent of the city budget, the total budget would increase a little less than three percent under those assumptions.
However, the council requested a parallel version of the budget, a “flat” version assuming no tax growth, following news that the city’s sales tax revenues are running behind last year’s totals. If the trend continues, San Marcos will endure a sales tax decline for the first time in more than 20 years.
The city’s May sales tax check from the state comptroller, coming in at less than $1.5 million, was 14.62 percent lower than the May 2008 check, which was more than $1.7 million. For the year to date, San Marcos is running about $350,000 behind last year in sales tax collections.
City Manager Rick Menchaca told council that the city is looking at a $70,000 shortfall on the present budget. Menchaca added that he doesn’t anticipate that tax revenues for FY 2010 will actually decline, however, because the preliminary property valuations from the Hays County Central Appraisal District (CAD) are up about three percent.
Under the original assumptions, a three-percent increase for personnel costs would add up to just more than $1 million in additional salaries and benefits per employee, according to a staff memo about the budget. Those costs don’t include the additional funding needed to address “meet and confer” agreements with civil service employees. Those agreements are yet to be made.
However, the costs do include funding for health insurance, retirement plans, merit increases and a compensation plan designed to bring the city even with market value for all other employees.
San Marcos Mayor Susan Narvaiz suggested that the city could easily close a $70,000 budget gap by cutting merit pay increases on the next budget. Narvaiz argued that employees in the private sector are being denied pay increases.
Additionally, Narvaiz said, city employees will receive pay increases, anyway, because the city is budgeting a second phase of adjustments to meet the recommendations of a study showing that the city pays its employees below market value. Budget plans call for about $750,000 to be added to employee salaries to bring the city closer to the market for those positions.
By cutting merit increases entirely out of the budget, the city would save about $423,000.Email | Print